Morganable Economy Watch
While the figure underscores the significant value of Nigeria’s hydrocarbon resources, it also reflects the volatility that continues to characterise the oil sector
kaNo —
Nigeria recorded an estimated N41.74tn from crude oil and condensate production in the first half of 2026, as output showed signs of gradual recovery despite persistent structural challenges in the upstream sector.
An analysis of production data released by the Nigerian Upstream Petroleum Regulatory Commission revealed that the country produced about 295.18 million barrels between January and June 2026, with an average daily output of 1.63 million barrels per day.
The six-month production was valued at approximately $28.08bn, based on prevailing international crude oil prices and official exchange rates from the Central Bank of Nigeria.
While the figure underscores the significant value of Nigeria’s hydrocarbon resources, it also reflects the volatility that continues to characterise the oil sector.
However, when compared to the corresponding period of 2025, output still declined slightly, suggesting that the recovery remains fragile.
February Witnessed Drop In Production
The first quarter of 2026 began on a relatively weak note. February witnessed a sharp contraction in output, with daily production dropping by 8.82 per cent to 1,483,940 barrels per day.
Combined with the shorter 28-day calendar month, total production fell to 41.55 million barrels, marking the lowest monthly output within the period under review.
Production began to recover in March, rising by 5.40 per cent to 1,564,100 barrels per day.
The rebound strengthened further in the second quarter. In April, daily production rose by 6.35 per cent to 1,663,430 barrels per day, resulting in total output of 49.90 million barrels.
The upward trajectory continued into May, when production increased by 2.25 per cent to 1,700,800 barrels per day. With 31 days in the month, May recorded the highest output for the half-year at 52.72 million barrels.
June sustained the momentum, as daily production rose by another 2.03 per cent to 1,735,398 barrels per day, contributing 52.06 million barrels to the cumulative total.
The steady rise across April, May and June marked the strongest quarterly performance in recent periods.
Using average monthly prices for Bonny Light crude, Nigeria’s benchmark oil grade, the estimated value of production in dollar terms stood at $3.43bn in January.
This declined by 12.24 per cent to $3.01bn in February, reflecting both reduced output and market conditions.
March recorded a dramatic surge in revenue, rising by 70.76 per cent to $5.14bn, largely driven by geopolitical tensions in the Middle East that pushed global oil prices higher.
The upward trend continued in April, with revenues peaking at $6.32bn following a further 22.96 per cent increase.
However, the gains proved short-lived. Revenue declined by 6.01 per cent to $5.94bn in May before dropping sharply by 28.62 per cent to $4.24bn in June as global oil prices softened.
When converted to naira using official exchange rates, the pattern remained consistent.
January recorded an estimated N5.18tn, which fell to N4.52tn in February. March saw a sharp rise to N7.71tn, followed by a peak of N9.40tn in April.
Revenue declined thereafter, dropping to N8.74tn in May and falling further to N6.19tn in June. Overall, the six-month production yielded a gross value of N41.74tn.
Industry experts, however, caution that these figures do not represent actual government earnings.
It also excludes crude oil allocated to investment partners, meaning the Federal Government’s net revenue is significantly lower than the headline figures suggest.
The gradual recovery in production has been attributed to renewed efforts by the Federal Government to stabilise the oil sector.
Authorities have intensified security around oil infrastructure, curbed crude oil theft and encouraged upstream investments under the Petroleum Industry Act.
The government has consistently emphasised that boosting crude oil production remains critical for increasing foreign exchange earnings, strengthening fiscal stability and funding national development.
Global market conditions also played a significant role in shaping revenue outcomes during the period. Bonny Light crude averaged $68.05 per barrel in January, rising to $72.33 in February.
Prices surged to $106.09 in March and peaked at $126.71 in April amid heightened geopolitical tensions and supply concerns.
The market later moderated, with prices declining to $112.63 in May and $81.48 in June, contributing to the drop in revenue despite improved production volumes.
Nigeria’s Oil Output Witnesses Significant Increase
Recent data from the Nigerian Upstream Petroleum Regulatory Commission showed that Nigeria’s crude oil output has reached its highest level in more than six years, with the country exceeding its quota set by the Organisation of the Petroleum Exporting Countries for four consecutive months.
The commission attributed the improved performance to enhanced operational stability, reduced disruptions to oil infrastructure and improved crude evacuation processes.
In a statement by its Head of Media and Corporate Communications, Eniola Akinkuotu, the regulator noted that June marked the fourth consecutive month of production growth, signalling a sustained recovery in the upstream sector.
The commission said consistent production across key oil assets, improved efficiency in crude evacuation and better production uptime contributed significantly to the gains recorded.
Despite Gains, Nigeria Still Falls Below Its OPEC Quota
Despite these improvements, Nigeria’s average production still falls below its OPEC quota for most months, highlighting ongoing challenges within the sector.
The N41.74tn gross value recorded in the first half of the year represents a substantial portion of the Federal Government’s projected N60.97tn oil revenue for the 2026 fiscal year.
Experts warn that maintaining production above 1.7 million barrels per day in the second half of the year will be crucial if Nigeria is to meet its budget targets, boost foreign exchange inflows and fully benefit from favourable oil market conditions.
